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Starbucks Will Venture Into Coffee Liqueur

The Starbucks Corporation's latest attempt to create a beverage that is not just for breakfast starts today with the nationwide introduction of an alcoholic coffee drink.

It will market the drink, Starbucks Coffee Liqueur, through a partnership with Jim Beam Brands, a unit of Fortune Brands.

The liqueur will be sold in bars, liquor stores and restaurants in 750-milliliter bottles for $22.99. It will not be available at Starbucks coffee outlets. Neither company would disclose financial details of the agreement.

The expansion into spirits is part of a diversification strategy by Starbucks, of Seattle.

It is experimenting with bacon-and-egg breakfast sandwiches, adding to its lunch menu and installing stations in many of its stores that let customers make music CD's.

The liqueur is not the first stand-alone product the company has introduced. Starbucks joined with PepsiCo to bottle and distribute its Frappuccino drinks, and sells coffee ice cream through an agreement with Dreyer's Grand.

The Pepsi and Dreyer's partnerships will represent a projected $86 million in income for the company this year, and liqueur sales will be a fraction of that, said Glenn Guard, a restaurant analyst with Legg Mason.

"This is a company that I'm estimating will have systemwide sales of over $8 billion this year," he said. "To move the needle, you have to have a pretty large operation."

The notion of a Starbucks-brand liqueur was conceived nearly a decade ago.

"It all goes back to the research we did showing that 50 percent of our consumers are liqueur drinkers," said James L. Donald, who is to succeed Orin C. Smith as chief executive in March.

Thomas J. Flocco, the chief executive of Jim Beam, said his company had concocted a dozen cocktail starter recipes using the liqueur, including a "Seattle manhattan." Thirty more cocktails have been devised by bartenders.

The product has already caused some controversy. Zach Mann, the owner of a pizza restaurant in Peoria, Colo., and some friends organized a protest, placing 2,500 white crosses in an empty lot to represent the 15- to 20-year-olds killed each year while driving drunk. The group also created a Web site called Stardrunks.com, which it later shut down.

Starbucks is supporting an alcohol-awareness program for middle-school children and their parents as part of its product introduction.

Mr. Donald said the decision to support the program had been made before the protests began.

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Results to Be Restated

(By Reuters)

Starbucks said yesterday that it would restate three years of financial results, reducing retained earnings in the 2002, 2003 and 2004 fiscal years by $12.6 million because of errors in the way it accounted for leases.

The company also filed its first-quarter results with the Securities and Exchange Commission after a short delay.

Starbucks said last week that it needed a five-day extension for the quarterly filing to address concerns raised by the S.E.C.'s top accountant in a letter to the American Institute of Certified Public Accountants.

In the letter, the official, Donald T. Nicolaisen, asked for more specifics in companies' financial statements about how they accounted for property leases after a wave of restatements from restaurant chains.